Already a Bloomberg.com user?
Sign in with the same account.
Buck up, BlackBerry addicts. At least that's the message from Research In Motion (RIMM
), which on Feb. 9 took pains to allay users' concerns that a legal squabble will result in a U.S. shutdown of the popular wireless e-mail service. RIM unveiled long-awaited details of a "workaround," or a plan for keeping BlackBerrys up and running in the event RIM ultimately loses the long and winding patent dispute with NTP (see RIM's Web site for information about the workaround.)
To recap, in 2001, closely held NTP successfully filed suit against RIM for patent infringement. Now, after four bitter years of fighting, the District Court for the Eastern District of Virginia is set to decide soon whether to issue an injunction upholding that earlier ruling. At the same time, the U.S. Patent & Trademarks Office is reexamining the patents at the heart of the flap. In preliminary findings, the PTO overturned all the key patents, and a final review is due in the coming weeks.
Here's an overview of the workaround and some of the issues it raises:
What exactly is the workaround?
It's a software fix, called the BlackBerry Multi-Mode Edition, that's designed to not infringe on NTP's patents. If the court decides to impose an injunction, it would allow RIM to continue selling its popular mobile e-mail devices in the U.S. and provide uninterrupted service to its more than 3 million U.S. customers.
How does it work?
It would work by changing the part of the network where e-mails are stored. Right now, when someone is out of wireless coverage range and can't immediately get e-mail access, RIM's service stores incoming messages on computers at one of its two network operations centers, or NOCs. When you come back into coverage range, those e-mails are forwarded to you automatically.
Under the workaround, these waiting e-mails would be stored somewhere else -- on the servers that sit behind the firewall of a company or carrier network. A large part of the infringement of the NTP patents is based on the e-mails being stored at the NOC, analysts say. "Conceptually, I think this does get around the patents," says Ken Dulaney, an analyst for researcher Gartner Group, who's following the case and has been briefed by RIM on the workaround. RIM says its legal counsel maintains the workaround doesn't infringe on NTP patents.
How is it installed?
That depends on what the court decides. If the court issues a broad injunction that covers existing and future subscribers and devices, then a software upgrade will have to be installed on both the devices and the corporate and carrier servers that relay the data and e-mail.
But there's a wrinkle to bear in mind. RIM is asking the court not to impose an injunction on devices that have already been sold. The Canadian company argues that it already has an implied license with NTP on these devices, and so they shouldn't be covered by an injunction.
The reason: A jury found RIM guilty of infringing on NTP's licenses in 2002. RIM lost its bid to overturn that verdict. So, even if the Patent Office throws out NTP's patents, RIM still has to pay royalties for the time up until the patents are overturned. If the judge buys this argument, then the workaround would have to be installed only on devices sold after the injunction is imposed.
That's all very interesting. But what does it mean for me?
If the court decides that an injunction should apply to all existing and new BlackBerrys, then every one will need to have the software installed. (RIM says it will soon begin shipping new devices with the software already installed.)
Such a forced upgrade would be a real hassle. Corporate info-tech people would have to install the patch on all the devices used by employees. Carriers, such as Cingular Wireless and T-Mobile, will have to figure out whether to ask people to ship their devices to them, bring them into a store, or have people download the patch online. The patch also has to be installed on the server. Companies that own their own servers (called BlackBerry Enterprise Servers), would install a patch.
How would the workaround affect my service?
Peter Dobrow, a spokesman for T-Mobile, which has been testing the workaround, says, "To date we have verified the functionality with no visible effects on the end-user functionality." And analysts who have been briefed think that, based on how the workaround has been described, it wouldn't affect service, although it might take a few seconds longer to get e-mails.
Cingular Wireless, the largest U.S. mobile-phone service provider, says it's not taking any chances. "We have all sorts of options for our customers," says Cingular Chief Executive Stan Sigman. "But [a shutdown] would clearly be disruptive to our customers and everybody else's customers that are on that service. Whether their workaround is a solution or not, that is for them to decide," Sigman says. "We need the issue resolved. We're concerned about our customers being impacted by that. Absolutely."
Is the workaround available to companies and individuals who use BlackBerrys?
Not right now. Wireless carriers are testing it, but RIM will release the software generally after the court's ruling.
Why is RIM giving more details about the workaround?
People following the case cite two reasons why RIM, which to now has been close-mouthed about the workaround, is saying more now. It needs to keep customers, worried about a shutdown, from fleeing to rivals. RIM also wants to put pressure on NTP so it will accept a lower offer if the parties end up settling the suit (see BW Online, 12/22/05, "From RIM, Good News -- and Grim").
What is going on with the Patent Office review?
In all, eight NTP patents are being reviewed. But after an appeals court in August scaled back an initial infringement ruling, four patents remain at the heart of the case. In all preliminary reviews, the PTO has rejected all of the patents and has said it plans to reject them in final reviews. With a new fast-track review that the PTO has put in place for the NTP patents, the final review could come down as early as March.
Still, even if the PTO review rejects the four patents, NTP can appeal to a board within the PTO and then to a federal Circuit Court of Appeals. This could take months.
How will NTP react to the workaround?
NTP has said it will inspect it closely to see if it infringes on NTP's patents. If NTP thinks it does, then it would go to the judge for patent infringement and force RIM to stop using the workaround. "Once we see it, we can assess it and say, 'Yes that's a workaround,' or 'We're going to sue you for contempt,'" says Kevin Anderson, a lawyer at NTP's legal counsel, Wiley Rein & Fielding. "Until we see the technical details, we can't do anything about it."
The tricky issue is that companies and carriers using the workaround could also be found to be liable for infringement. Another issue is that the patents RIM has filed for the workaround might infringe on another company's patents. Without seeing the patents, that's an unknown factor, say lawyers following the case. "The risk of liability is hard to judge," Thomas Carulli, a patent attorney at Kaplan, von Ohlen & Massamillo. "Obviously they have worked on this as carefully as they could to make sure that they still couldn't fall into infringing."
Couldn't RIM just settle and avoid all this hassle?
Many analysts still expect this. A $450 million preliminary settlement agreed upon last March fell apart in June. Some analysts now expect the settlement to be between $650 million and $1 billion (see BW Online, 12/08/05, "The BlackBerry Widow's Tale"). Some analysts, including Andrew Neff at Bear Stearns, think the workaround and the PTO review give RIM more leverage to reach a more advantageous settlement.